What is Estate Administration Tax?
What is Estate Administration Tax?
In Ontario, Estate Administration Tax (EAT), formerly known as Probate Tax, are owing to the Minister of Finance if a Certificate of Appointment of Estate Trustee is applied for and issued. EAT is calculated on the market value of the deceased’s estate, which is the total of all assets owned at the time of death. For an individual acting as an Executor for the first time, the concept of Estate Administration Tax can be a confusing concept to navigate. Let’s break down some of the most common questions surrounding EAT.
Which assets should be included to determine the EAT?
· Bank Accounts
· Real Estate
· Investments
· Vehicles and Vessels
· All other property owned by the deceased tangible or intangible
Other common assets such as accounts with named beneficiaries, and accounts/assets held jointly with right of survivorship with other individuals are not included when determining the EAT total.
What if it’s a small estate? Do I still need to pay EAT?
You do not need to pay Estate Administration Tax if the value of the estate is $50,000.00 or less. Note that you will still need to file an Estate Information Return within 180 days after the Certificate of Appointment has been issued.
How do you determine the EAT total owing?
The value of the estate is rounded to the nearest thousand when determining the Estate Administration Tax owing. For estates valued at over $50,000.00 the EAT is calculated as $15.00 for every $1,000.00 beyond the first $50K. Let’s look at an example below.
The estate is valued at $121,885.83. This total would be rounded to the nearest thousand, $122,000.00.
· $0.00 per $1,000.00 for the first $50,000.00
· $122,000.00 - $50,000.00 =$72,000.00
· $72,000.00 / $1,000.00 = $72.00
· $72.00 x $15.00 = $1,080.00
In this example, the Estate Administration Tax owing would be $1,080.00.
Thankfully, the Government of Ontario has a lot of online resources surrounding Estate Administration Tax. To read more about the details of EAT, click here. To access the Estate Administration Tax online calculator, click here.
Remember, if you are an Executor there is always help and guidance at ETP Canada for you. Click to book a free 15-minute phone consultation with a member of our team, or to take matters into your own hands and sign up for our online course called Executor Ready today!
This blog is not intended to be legal advice and should not be relied on as such. If you require legal advice, please contact a legal professional concerning your particular circumstances.